2 Voidable contracts.There are three kinds of contract
which are voidable: leases of land, partnerships and the
purchase of shares. Voidable means that the contract is
binding on the minor until he decides to reject it. He
must repudiate the contract before becoming 18 or
within a reasonable time of reaching 18. The main effect
of repudiation is to relieve the minor of all future liabil-
ities, but he can be sued for liabilities which have already
accrued, such as arrears of rent.
3 Other contracts.Before looking at how the law deals
with other contracts made by minors, we will consider
the effect of changes introduced by the Minors’ Con-
tracts Act 1987 (MCA 1987). The law concerning con-
tracts made by minors used to be governed mainly by
the Infants Relief Act 1874. Section 1 of the 1874 Act
provided that contracts for the repayment of money lent
or to be lent, contracts for the supply of non-necessary
goods and accounts stated were ‘absolutely void’.
Section 7 placed a bar on enforcement proceedings
against a minor who ratified a contract on reaching 18
unless the ratification was contained in a new contract
for which fresh consideration had been provided.
The MCA 1987 implements the recommendations of
the Law Commission contained in its 1984 Report on
Minors’ Contracts. Section 1 disapplies the Infants Relief
Act 1874 to contracts made in England and Wales after
9 June 1987 (and by a subsequent Order, to contracts
in Northern Ireland from 26 July 1988). The result is to
restore the application of the common law rules to such
contracts. In particular, a contract made by a minor,
which is later ratified by the minor on reaching 18, is
now enforceable against the minor without the need for
a fresh contract. Section 2 makes any guarantee support-
ing a loan to a minor enforceable against the adult guar-
antor, thus reversing the position established in Coutts
& Cov Browne-Lecky(1946). Section 3 improves the
remedies available to an adult who has contracted with
a minor. We shall now examine in more detail the com-
bined effect of the common law and the MCA 1987.
Contracts which are neither valid nor voidable do not
bind the minor but are binding on the other party. As
has been noted above, a minor may be bound by such
a contract if he ratifies it, either expressly or impliedly,
on reaching 18. Although the minor can enforce the
contract against the other party, his remedies are limited
since he will not be able to obtain an order of specific
performance because of lack of mutuality.
Once the contract has been performed by the minor,
he or she cannot recover money paid or property trans-
ferred under the contract except in the same circum-
stances in which such a remedy would be available to
an adult, i.e. where there has been a total failure of con-
sideration. The case of Stocksv Wilson(1913) and s 3(1)
of the MCA 1987 support the view that a minor acquires
title (rights of ownership) to any property transferred to
the minor under such a contract. Similarly, a minor can
transfer title in property under a non-binding contract.
A minor may be liable to restore certain benefits which
he has received under a contract which does not bind
him. Section 3(1) of the MCA 1987 provides that where
a contract has been made with a minor which is unen-
forceable against him, or he has repudiated it, because
he was a minor, the court may, if it thinks it just and
equitable to do so, require him to return the property or
any property representing that which he has acquired.
The scope of the statutory remedy is as follows:
(a)The minor can be made to return the goods and
money which he still has in his possession. So if Seb-
astian, age 17, acquires a case of champagne on credit
and fails to pay he can be required to return the goods to
the seller.
(b)If the minor has exchanged the original goods for
other property, the court may require him to hand over
the goods received in exchange. So if Sebastian, in the
example above, has bartered a bottle of champagne for
a dozen quail’s eggs, the seller of the champagne may be
able to recover the quail’s eggs.
(c)If the minor has sold the original goods for cash,
he can be ordered to hand over the sale proceeds. So if
Sebastian sold the case of champagne for cash, he could
be required to hand over the money to the seller.
(d)If the minor has consumed or disposed of the goods,
or the proceeds of any sale of the goods, he cannot be
made to compensate the other party. So if Sebastian
drank the champagne or used the proceeds of any salePart 3Business transactions
230
Cowernv Nield(1912)Nield was an infant hay and straw dealer. He refused to
deliver a quantity of hay which had been paid for by
Cowern. It was held that, provided the infant had not
acted fraudulently, he was not liable to repay Cowern.